The Practice of the Development of Africa’s Agro-industry Chain Dr Stephen Mbithi CEO: FPEAK- Kenya Fresh Produce Exporters Association of Kenya Coordinating CEO: Hort Council for Africa (HCA) July: Dar: 2012 China-Africa Poverty Reduction and Development Forum

...a Viable Option: High value Agric for Poverty alleviation Example: Kenyan Hort: – Total value – 3.7 billion US$ Exports 2011: 1.2 billion US$ – Vegetables/Fruits: 650 million US$ – Flowers – 550 mil US$ Domestic: – 2.5 mil US$ (2008 estimates) – 1.5 million farmers on hort, total 4.5 mil direct/indirect dependent (11% of total population) – The Players: Smallholders-70% by value of fruits and vege exports, and about 10% flowers Large scale growers- mainly in flowers (10% flowers are smallholder produced)

How it happens… A market-led production….STRICTLY – Production synchronized with supply contracts secured with EU supermarkets (82% total hort exports) Exporter – Led Smallholder production – Standardization, therefore bulking at smallholder level – 24 hours from farm to supermarkets in the market Limited or no cold storage facilities in fields Cold storage/packaging/processing facilities at Nairobi – About 1,000MT fresh produce air-freighted daily during peak selling season

what about…Standards? Standards compliance KEY to marketing – Enhancing Consumer confidence- standards are a passport to trade – Small-scale farmers comply to standards Official Control Systems Market Standards- Compliance is Private sector driven – KenyaGAP…benchmarked to GLOBALGAP – Certification system

What we have learnt… Smallholder production is Profitable: – Either small or large is OK..not medium size 1 acre to 10 Ha or above 40 HA – Economies of scale Vs return on investment for mechanization – CORRECTION- smallholder- commercial NOT subsistence farming Uniform practices, and standards compliance – Key to bulking, hence key to smallholder participation in the global value chain Training- horticulture is knowledge intensive Facilitative Govt Policy – Strong Government standards enforcement Institutions – Phytosanitary and Sanitary standards institutions Private sector leadership is key, – Need for strong private sector organizations Role of FPEAK (since 1976) Public- private Partnerships: Practical Training Centre (PTC)

…Future Perspectives Market diversification is a MUST – China market for African agriculture is KEY to future contribution of farming to poverty alleviation in Africa Reducing Cost of production and logistics – Chinese Technology is key. Water distribution, transport, greenhouses Needed – More cost-effective sea and air connectivity between east Africa and China Smallholder production is the future: – Land pressure (high population) in high potential areas – Better wealth distribution for agric revenue – Large-smallscale linkages, and efficient value chains- remain key

Thank You Dr Stephen Mbithi